Local manufacturers are grappling with severe power cuts lasting over 18 hours daily, forcing them to rely on expensive diesel generators, which significantly increases production costs.
Zimbabwe requires about 1,700 megawatts (MW) of electricity during peak hours, but the state-owned power utility, ZESA, was generating just over 800 MW on Wednesday, October 30.
The Confederation of Zimbabwe Industry (CZI), the country’s largest business lobby group, described the situation as dire. Said the CZI:
<blockquote>
Industry members have reported going for between 12-18 hours without electricity and report that power is being restored between 11 pm and 7 am in the majority of cases.
The absence of a load schedule that is strictly adhered to has exacerbated the effect of the power cuts as affected companies cannot plan employee deployment resulting in redundant working staff for periods when power is unavailable.
The other consequence of unscheduled power cuts is that machinery requires a systemized shutdown process in order to ensure raw materials are fully utilized and the machinery itself is properly shut down.
Sudden power outages result in loss of raw materials and equipment damage.
</blockquote>
Some machinery requires process heating, which involves applying heat during industrial operations. This heating can take 3 to 5 hours before production starts.
Consequently, if electricity is available for 8 hours, effective production time is limited to just 3 to 5 hours. The CZI said:
<blockquote>
However, the electricity bill will reflect usage of 8 hours against actual production of only 3-5 hours. In sectors that heavily rely on electricity such as the plastics and cement industry this can mean failing to achieve the economies of scale necessary to cover production costs.
This situation is particularly severe for companies that do not have dedicated power lines which are normally found in the small to medium sectors.
Companies have sought to mitigate the effects of power outages through the installation of solar energy and battery storage for use at night.
However, this is often very expensive and requires significant funding that many firms struggle to secure.
</blockquote>
Christopher Mugaga, CEO of the Zimbabwe National Chamber of Commerce (ZNCC), told <a href="https://businesstimes.co.zw/power-crisis-deepens-3/">Business Times</a> that power outages will significantly affect the country’s economic performance in 2024.
He said the ongoing rolling blackouts could reduce the Gross Domestic Product (GDP) by 0.6 percentage points.
Mugaga operating generators is costly, which companies are using for 14 to 18 hours daily.
This situation not only deters investments but also leads to substantial losses in foreign direct investment (FDI), estimated between $120 million and $150 million annually due to power shortages.
Oswell Binha, chairman of the CEO Africa Roundtable, said power outages can last 18 hours or more, and in some cases, the power quality is so poor that businesses cannot operate even when electricity is available.
He described the situation as critical, with many companies relying on costly generators. This dilemma forces businesses to choose between raising prices or facing severe shortages in stores.
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Pindula News

Manufacturers in Zimbabwe are suffering because of long power cuts, lasting over 18 hours every day. This means they have to use expensive diesel generators, making production more costly. The lack of a proper schedule for power cuts is causing problems for companies who can't plan their work properly. Some companies are trying to use solar energy as a solution, but it's very expensive. The power cuts may harm the country's economy and lead to a loss of foreign investments. Overall, the situation is critical for many businesses in Zimbabwe.

Manufacturers Struggle Under Burden of Daily 18-Hour Power Cuts

The Reserve Bank of Zimbabwe’s Financial Intelligence Unit (FIU) is targeting manufacturers who refuse to accept Zimbabwe Gold (ZiG) or limit transactions in the local currency.
FIU is concerned that the actions of some players in the manufacturing sector could lead to fresh volatility in the exchange rate and inflation rate.
FIU Director General Oliver Chiperesa told <a href="https://businesstimes.co.zw/fiu-target-manufacturers-2/">Business Times</a> that several accounts of the offending manufacturers and suppliers have since been frozen. He said:
<blockquote>
We started this targeted exercise against manufacturers last week and we have frozen the accounts of several industry players and penalised them. They have paid penalties and we will monitor if they are now in full compliance.
We are targeting more and more this week as we act on reports we are getting from the retailers.
One area that remains of concern to us is some manufacturers and suppliers who still restrict the amounts of ZiG that they receive from downstream traders.
We are using both engagement and enforcement against them. We have already frozen the accounts of a handful of manufacturers and penalised them.
We are expecting compliance levels to continue to increase in that sector, which will in turn have a cascading effect down the supply value chain and ultimately benefit the consumers.
</blockquote>
Chiperesa cumulatively 534 accounts were frozen, and 161 were penalised for violating exchange control regulations. 12 foreign currency manipulators were caught between Monday and Tuesday this week.
He said that certain offenders will be barred from using financial services for a considerable amount of time.
An official from the country’s biggest lobby business group, the Confederation of Zimbabwe Industries (CZI) told Business Times that they were not charging exorbitant prices. Said the official:
<blockquote>
We are charging a price that allows us to continue producing, we can’t charge a price that will see us close shop again. There is a need to engage so that we can have a common understanding.
Manufacturers accused the FIU of harassing struggling companies to impose “price controls”.
</blockquote>
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Financial Intelligence Unit Targets Manufacturers

Manufacturers are adamant they will continue supplying goods to unofficial traders (tuckshops) who exclusively pay in United States dollars.
This is despite pressure from the government for them to follow proper supply and distribution channels.
Last week, the Minister of Industry and Commerce, Sithembiso Nyoni, said manufacturers are “killing” wholesalers and fomenting chaos in the market by bypassing wholesalers and directly supplying goods to retailers and informal traders.
However, an executive with a Harare-based manufacturing company, who preferred anonymity told <a href="https://businesstimes.co.zw/manufacturers-vow-to-chase-greenback-in-the-informal-sector/">Business Times</a> that the Minister should engage industry rather than “spit venom”. Said the business executive:
<blockquote>
I don’t think [Industry and Commerce] Minister Stembiso Nyoni knows what we are going through to survive the current challenges.
We need a great deal of foreign currency but the whole economy is only limited to US$5m a week on the auction hence we need these cash payments from the informal traders to oil the industry.
We can’t be forced to supply N Richards, Metro Peech and Mohamed Mussa when they pay the Zimbabwean dollar after 45 days using the price of the delivery date at a time when they will be adjusting prices twice or thrice per week.
Instead of spitting venom, the minister should sit down with the industry and discuss what should be done to find common ground.
</blockquote>
The president of the Confederation of Zimbabwe Industries (CZI), Kurai Matsheza, said manufacturers are not discriminating against anyone. He said:
<blockquote>
Manufacturers are bypassing nobody; they just distribute to whoever meets their trading terms best.
From our members all we hear is that they just want to have that dollar for their product as fast enough so that they are able to keep on producing; remain in business and grow.
</blockquote>
Speaking during a tour of National Foods Holdings on Wednesday last week, the Minister of Industry and Commerce, Nyoni said the Government will “address the distortions” in the supply chain of products.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

Manufacturers Vow To Continue Supplying Tuckshops

Economic commentators have condemned the measures announced by Finance and Economic Development Minister Mthuli Ncube last week to stablise the exchange rate and prices of goods and services.
Some of the measures included the removal of duty on 11 selected basic grocery items, allowing businesses to keep 100% of their locally generated forex revenue, and a pledge to fine-tune the foreign exchange auction system so that it operates on a pure Dutch auction basis.
Speaking to <a href="https://www.newsday.co.zw/thestandard/business/article/200011510/it-will-not-work-industry-tells-ncube">Standardbusiness</a>, economic analyst Vince Musewe said Ncube’s measures are reactive and will not work. He said:
<blockquote>
An economy cannot be managed in a reactive mode from crisis to crisis, but sadly that is what is happening.
There is no debate that Zimbabweans prefer the US dollar and those with US dollars will continue to demand a premium.
Despite the country generating US$12 billion per annum, the appetite for the US$ dollar will never be satisfied and it is clear the informal sector does not react to economic policy measures but operates to maximise profits.
This has resulted in a supermarket economy where everyone is selling some imported trinkets to make a living and importing basic goods kills local industry.
The scenario has not changed where the rate goes up inflation goes up and the rate goes up creating a vicious cycle.
It is time to realise that the dollarisation of incomes is the only sensible thing to do to cushion citizens.
Salaries and wages must now be in US dollars and companies must freely charge in US dollars.
The economy has rejected the Zimbabwe dollar; nobody wants it.
</blockquote>
Confederation of Zimbabwe Industries (CZI) chief executive officer Sekai Kuvarika said:
<blockquote>
I think we need to give the stabilisation measures a chance before we destabilise the manufacturing sector by flooding the market with cheap imports.
You also have to remember that these imports are coming from environments that are not the same as we are.
</blockquote>
She said there was no shortage of basic commodities in the country.
Another economic analyst Stevenson Dhlamini said:
<blockquote>
It’s difficult to conclude whether they are effective or non-effective, but it’s showing that they are appreciating that we are in a crisis.
There is a clause where the minister says he will increase the interest rates to curb inflation in the short term.
My belief is that the interest rates and the parallel market have to continue to chase each other.
The more you increase interest rates the parallel market simply increases its premiums to compensate for the higher interest rates.
So the question can be: is the interest targeting the best or the most effective response at this stage or rather we should be addressing the sources of money supply growth?
</blockquote>
Meanwhile, Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya said that the measures will support the issuance of gold coins and tokens by the central bank.
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